Question

summer nights sells bottles of bug spray for 9.00 eaqch variable costs are 3.00 per bottle while fixed costs are 50000 per month for volumes up to 40,000 bottles of spray and 59000 per month for volumes above 40,000 bottles of spray. The flexible budget would reflect monthly operating income for 18,000 bottles of spray 33,000 bottles of spray of what dollar amounts

Answer 1

Answer: $58000; $148000

Step-by-step explanation:

Sales = 18000 × $9.00 = $162000

Less: Variable cost = 18000 × $3 = $54000

Contribution margin = $108000

Less: Fixed cost = $50000

Operating income = $58000

Sales = 33000 × $9.00 = $297000

Less: Variable cost = 33000 × $3.00 = $99000

Contribution margin = $198000

Less: Fixed cost = $50000

Operating Income = $148000